Williams Adds to the Hosted Telephony Debate

Campbell Williams, Marketing Director at Charterhouse Voice and Data has added to the debate on CPE versus Hosted Telephony

“ Matters are confused when one considers that the oft-stated commercial advantage of hosted – per user, per month billing – can be replicated with CPE. If the customer wants per month, they can lease; if they want per user, they can opt for managed service.

Technically there are really only three options:

1. Interim IP adoption via IP enabling existing PBXs or via IP gateways.

2. Having native IP via hybrid or pure IP telephony.

3. Having native IP via hosted IP telephony.

So the real question is the one that is often not asked: what are we comfortable with?

Sales Comfort

Reseller salespeople are comfortable with CPE. It’s what they’ve always sold and they understand the model. Many of them have spent years getting comfortable with IP telephony, they’ve been on the training courses, they’ve got some wins under their belt, and that’s now their default setting. It may be Avaya IP Office, Mitel 3300 ICP or Cisco CallManager, but it will be CPE IP telephony. They have a buy price, they know their sell price, and they can work out the all-important commission payment in their heads. It can be a tricky proposition to tell sales people that they have to learn about a new product, that they sell in a completely different way, with a very different commission model. Even if it might put more in their pocket, they’ll choose the path of least resistance every time.

Technical Comfort

Even larger investments have been made by IP-literate channels in technical training. Presales and engineering staff must be trained, with a significant cost. Most resellers baulk at the prospect of these valuable resources being under-utilised. Moreover, we know what we’re doing here too. Most of the time all we need is some remote diagnostics and if we need to go to site, we already know where the problem is. It’s CPE – it’s familiar, it’s comfortable, we know how to install and maintain it. The hosted model changes this; any customer problem is often out of our hands and their hands, we can do nothing to fix it. Lack of control – perceived or otherwise – is as much an issue for the reseller as it is for the customer.

Revenue Comfort

As a reseller, Charterhouse understands the value of recurring revenues and multi-year contracts. We have a great many of them, be they CPS, mobiles, copier maintenance or telephony managed services. But we also love cash or lease hardware purchases. These can be revenue recognised immediately – they’re the big ticket items that pay commission cheques and the payroll every month. Lose them and the business will be in trouble. Channels are comfortable with the buy for x and sell for y model; it’s not just comfortable, it’s essential. Hosted IP telephony models tell us that within 18-24 months, we’ll be at breakeven and anything we sell in the next 18-24 months is incremental; thus the business will be in far better shape in 3 to 5 years selling hosted versus selling CPE. This is all true and all fine on paper. But does anybody know a reseller that thinks, fiscally, more than 3 to 6 months out, let alone 18 or 60? Channel owner/managers are far too comfortable with instantly recognisable revenues: cash in the bank that pays their own mortgages as well as their staff salaries.

In Conclusion

I’ll conclude by building on the comfort analogy. To the channel, IP telephony is now like a very expensive leather sofa. We’ve spent a few years wearing it in – it might have hurt at first, but now it’s just right. It will need to be one hell of a good sofa that replaces it, otherwise we’re keeping it. Right now, for most channels, hosted IP is a small chair in the corner. It’s nice to have it around if you need it, but it’s not the focal point of the room.

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